(May 29, 2020) Maryland businesses may see some financial relief with a possible freeze on the minimum wage increase, according to Delegate Wayne Hartman (R-38 C), who said state officials have been talking about delaying the increase for a year because of the financial impacts of the coronavirus pandemic.
As it stands, the minimum wage rose to $11 an hour this year for both small and large businesses. The minimum wage will increase every year until it reaches $15 an hour in 2025 for most employers. The Maryland General Assembly passed the “Fight for Fifteen” bill last March by overriding Gov. Larry Hogan’s veto.
Businesses with fewer than 15 employees must raise the minimum wage 60 cents annually to reach $15 by 2026, while businesses with at least 15 employees will raise it 75 cents annually and then $1 the last year, to reach $15 by 2025.
According to Hartman, the bill allows for the Board of Public Works to implement a one-time freeze that would be decided on in October and implemented Jan. 1. This would be largely based on the economic status and job losses of the past six months.
“In light of what’s happening, I think many of the businesses are just trying to get through to next year,” Hartman said. “I think it’s going to be important to freeze this so that next year, the seasonal businesses will have the opportunity to try to rebuild from the impact.”
Hartman reiterated that the minimum wage would not necessarily affect all employees or employers.
“This is not a living wage that we’re talking about,” Hartman said. “We’re talking about impacting positions of people that might be taking on a summer job - college students and so forth.”
He added that some positions already pay more because of the skills needed. Hartman said the challenging year for businesses will have a trickle-down effect.
“When we lose a business, we lose jobs,” Hartman said. “We then have a vacant piece of real estate.”
He gave an example of the seafood industry relying on local restaurants’ demand for seafood, but some restaurants could close permanently as a result of the pandemic-related financial strain.
“There are so many jobs that are impacted by restaurants and other things here in town that if we don’t take action now to keep those places in business, the negative effect will be much greater,” Hartman said.
Nancy Schwendeman, interim executive director of the Ocean City Chamber of Commerce, said a minimum wage freeze would help businesses of all sizes.
“If they do have a lot of employees, they incur large expenses for labor,” Schwendeman said. “If that can be deferred to a time when they’re in a little bit better standing, that’s of course going to be a benefit.”
She added that some businesses may have already budgeted for next year’s wage increase, while their current forecasts could have changed because of state restrictions on business. In addition, some businesses may have to purchase personal protective equipment for staff, such as gloves and masks.
“It just makes operating a business that much more difficult in this day and age,” Schwendeman said.
She said that from what the chamber has heard, most businesses would support deferring the increase.
Hartman said he’s hopeful that the one-time freeze will have ample support.
“I didn’t realize how many different people were thinking along the same lines,” Hartman said. “It’s not only here with the seasonal jobs on the shore, the coronavirus is affecting businesses across the state.”
In the future, he said it’s important to differentiate between a living wage and minimum wage.
“If we don’t take this action to help the small businesses and it gets steeper, then it will start to affect those jobs and careers where people are trying to raise a family,” Hartman said.
He said he would write a letter to the Board of Public Works closer to October.